Medicare for all

In one hospital, Medicare pays $17,000 for a knee replacement. The same hospital can get $37,000 for the same surgery on a patient with private insurance. The RAND corporation recently gathered information on about a third of the hospitals in the US and studied four million insurance claims. Overall, prices for hospital care average 2-1/2 times more for private insurers than for Medicare.

This study is the first to reveal such disparities on a large scale. Hospital rates are normally closely held secrets between insurers and hospitals. Businesses that contract with insurance companies have no idea what their insurers are paying hospitals. But because the costs are so steep, many businesses off-load more of the expense onto their employees through higher premiums and deductibles. The expense of paying for employees’ health care has depressed wages and entrepreneurship. One textile manufacturer moved more than 1,000 jobs out of the country because it couldn’t afford to pay for insurance for its workers. This is becoming increasingly common.

What’s more, the trend toward consolidation among hospitals have spurred higher costs. They become more powerful systems that can demand ever-higher prices. Many are flush with money. In Colorado, which has the biggest disparity, hospitals are building new facilities and buying physician practices, even though their existing hospitals are only two-thirds full.

The health care industry makes up 18 percent of the nation’s economy and is one of the nation’s largest employers. In fact, it’s the biggest employer in at least a dozen states. Medicare for all (or some form of that) would cost jobs—maybe two million of them. But as one Stanford physician-economist says, the first casualties of a Medicare for all program would be the “intermediaries that add to cost, not quality.” These would include the armies of administrators, coders, billers and claims negotiators. Plus there would be far less need for drug and device sales representatives who ply their trade office to office and hospital to hospital. Few people would mourn the end of $35 million annual compensation packages for insurance executives or the downsizing of companies that have raised insulin prices to 10 times what they are in Canada.

As the president of Physicians for a National Health Program says, “you don’t need insurance companies for Medicare for all. You need hospitals.” The point of a health care system is to treat patients, not to buttress the economy.  

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